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Growing demand for cashless payments in Singapore: An opportunity for merchants

It is estimated that the global number of mobile phone users will pass a staggering five billion by 2019. Apps on mobile phones have made making financial transactions much easier and quicker.

Due to greater convenience, the use of mobile wallets has increased in recent times, with many consumers choosing to adopt this electronic payment method. Therefore, retailers and business owners stand to gain by offering cashless payment options to their customers.

Going cashless can also help merchants to streamline sales. The government itself has recognised the benefits of this, and has unveiled plans to achieve a fully cashless transport system by 2020. After all, handling cash comes with a cost, e.g. time taken to count and store physical currency. By switching to digital payment systems, merchants can save costs on cash-handling, and thereby use the funds for other purposes.

Why is the Singapore government driving towards a cashless society?

Global trends suggest that going cashless is inevitable. Digital payments are proving to be quick, easy and arguably more secure than regular payment methods. China is one of the world’s trailblazers in adopting mobile payments. Digital wallets such as AliPay and WeChat Pay are linked to citizens’ bank accounts and use QR codes to enable transactions, instead of traditional industry standards such as Near Field Communication (NFC).

With more merchants and consumers opting for cashless payment systems, Singapore’s government can provide structure to the process. Providing regulatory, advisory and structural frameworks would help ensure a smooth transition and bring Singapore a step closer towards its Smart Nation goals. Data collected can be used to create relevant policies that would bolster growth and encourage further innovation.

How do digital payments work?

In order to carry out cashless payments, a mobile wallet is required. A mobile wallet, which can be in the form of a downloadable app, contains credit or debit card information in a digital form on one’s mobile phone. When checking out at participating retailers, all customers have to do is access the mobile wallet and choose their card. Many stores also offer the option of just holding one’s mobile device at the transaction terminal. GrabPay functions as a mobile wallet where users can either choose to link their credit cards or top-up prepaid credits.

Are digital payments secure?

A common concern that arises is whether mobile payments are secure. Mobile wallets offer high security standards and can in fact be safer than using traditional payment methods such as credit cards. In the case of cards, the data that is transmitted upon payment contains card information, which can be intercepted by hackers.

In the case of mobile wallets however, each transaction is heavily encrypted, meaning that each purchase generates a random sequence of numbers instead of the actual card number. Therefore, even if these numbers are stolen, fraudsters cannot do anything with this information. Additionally, to access one’s mobile wallet in the first place, personal identification such as a PIN or fingerprint is required.

What is an example of a mobile payment option in Singapore?

GrabPay is a mobile wallet payment solution offered by Grab. Currently, more than 75% of Grab users in Singapore use GrabPay for their rides. GrabPay can now be used not just to pay for Grab rides, but to make purchases at outlets belonging to GrabPay merchants. Here are some reasons why retailers and business owners can benefit from cashless payment systems:

Doesn’t require a new technology infrastructure

Transactions are done via QR code through the mobile app. This means that no new payment devices such as NFCs are necessary. The GrabPay platform is also designed to be scalable and compatible with other QR-code-based mobile payment systems in Singapore.

There are now over thousands of local stores and hawkers in Singapore that accept mobile payment. This list is only growing, as the GrabPay service for restaurants and hawkers will be progressively introduced to local neighbourhoods such as Tanjong Pagar and Tiong Bahru. You can find the list of merchants supporting GrabPay here.

Access to over 4 million potential customers in Singapore

For retailers and merchants, with over 4 million ready Grab users in Singapore, and more than 90 million across Southeast Asia, switching to mobile payment opens up access to a whole new market of consumers. The app is easy to use, and when customers scan the QR code, you’ll instantly receive the credits in your Grab account. There are no terminal fees or subscription costs, which means less operating costs.

A more efficient way to track customer payments

Bookkeeping is made easier, as all daily transaction logs can be viewed instantly on the GrabPay Merchant app. This is especially important for small business owners who rely largely on cash. All transactions are recorded digitally, which ensures less errors for your business. As there is less handling of physical currency, employee theft can also be avoided.

The GrabPay platform itself is also safe. Grab holds safety at its core, and implements global standards and practices to maintain our low fraud rate in line with industry best practice rates. Grab’s proprietary risk and fraud detection system is also enhanced with sophisticated machine learning that progressively builds on the cumulative knowledge of users and their transactions.

Faster payments means better customer experiences

For consumers, it takes a mere two seconds to scan a QR code for payment. If transaction times are reduced, merchants can process a higher number of customers in a shorter time. Hawkers, for example, stand to greatly benefit from this as it becomes more convenient to serve customers, especially during busy periods.

Delay in payment settlements is a common concern for merchants who are hesitant to switch to cashless systems. GrabPay allows for same day settlement, whereby when you cash out, your funds will be auto swept at the end of every day.

Increase your customer lifetime value and loyalty

As all transactions are digitally recorded, merchants can use the data to analyse who your customers are and what they buy. This allows marketing efforts to be tailored to the relevant consumer groups.

Business owners can look into various loyalty programs, or offer rewards to ensure customers return. Currently for every dollar spent, GrabPay consumers earn points and can redeem them for food and shopping vouchers.